Audit Shows $8.8B Missing in Iraq

WASHINGTON – A soon-to-be-released audit will show that at least $8.8 billion in Iraqi money that was given to Iraqi ministries by the former U.S.-led authority there cannot be accounted for, FOX News has confirmed.

And three senators want to know where the cash is.

The draft audit by the Coalition Provisional Authority's (search) inspector general chastises the CPA — formerly led by L. Paul Bremer — for "not providing adequate stewardship" of at least $8.8 billion from the Development Fund for Iraq. The audit is not expected to be released for at least two or three more weeks, possibly longer.

The audit was first reported on a Web site earlier this month by journalist and retired Col. David Hackworth. A U.S. official first confirmed to Reuters the contents of the leaked audit cited by Hackworth were accurate.

The development fund consists of proceeds from Iraqi oil sales, frozen assets from foreign governments and surplus from the U.N. Oil-for-Food (search) program. Its handling has already come under fire in a U.N.-mandated audit released last month, which found no evidence of spending fraud by the CPA but said there wasn't enough oversight to ensure money was used for its intended purposes.

One of the main benefactors of the Iraq funds was Texas-based firm Halliburton, which was paid more than $1 billion of that money to bring in fuel for Iraqi civilians. The monitoring board said it had not been given access to U.S. audits of contracts held by Halliburton (search).

A three-member panel led by Paul Volcker is also investigating the Oil-for-Food scandal. The panel says it has evidence that dozens of people, including top U.N. officials, took kickbacks from the $67 billion program.

The most recent draft audit so far found that payrolls in Iraqi ministries under CPA control were padded with thousands of ghost employees.

In fact, Reuters reported, in one example, the audit said the CPA paid for 74,000 guards even though the actual number could not be validated. In another, 8,206 guards were listed on a payroll but only 603 people doing the work could be counted.

FOX News confirmed that Democratic Sens. Ron Wyden of Oregon, Tom Harkin from Iowa and Byron Dorgan of North Dakota want Defense Secretary Donald Rumsfeld (search) to tell them what the funds have been used for by the CPA, which handed over sovereignty to the Iraqis in June.

"The CPA apparently transferred this staggering sum of money with no written rules or guidelines for ensuring adequate managerial, financial or contractual controls over the funds," said the letter sent by the senators on Thursday, obtained by Reuters. "Such enormous discrepancies raise very serious questions about potential fraud, waste and abuse."

In June, Britain's third-largest political party, the Christian Aid, and aid activists from Christian Aid said that billions of dollars belonging to Iraq wasn’t accounted for by the CPA and that there were glaring gaps in the handling of $20 billion generated by Iraq's oil and other sources since the U.S.-led war to oust Saddam Hussein ended last year.